Grid Dynamics Holdings, Inc.

Greetings and welcome to the Great Dynamics Holdings, Inc. First Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Lilia Chernova, Head of Investor Relations. Thank you. You may begin.

Good afternoon. Welcome to Grid Dynamics' first quarter 2021 earnings conference call. Before we begin, let me remind everyone that today's discussion will contain forward-looking statements based on our current assumptions, expectations, and beliefs, including our second quarter 2021 financial guidance, the growth of Grid Dynamics' business, our objectives, and business strategies, as well as other forward-looking statements. You can refer to the disclosure at the end of company's earnings press release and form 8K filed with the Securities and Exchange Commission today for information about forward-looking statements that will be made on this call. All statements made today reflect our current expectations only, and we undertake no obligation to update any of them to reflect the events that will occur after this call. You can learn more about the specific risk factors that could cause our results To differ materially from today's discussion in the risk factor section of the company's form 10-K filed on March 5, 2021, and in the subsequent periodic reports that the company filed with the SEC. During this call, we will discuss certain non-GAAP measures of our performance. GAAP to non-GAAP financial reconciliations and supplemental information are provided in the earnings press release and the 8-K filed with the SEC. This call is also available via webcast. You can find all the information I have just described in the Investor Relations section of Grid Dynamics website. Joining us on the call today are CEO Leonard Lischitz and CFO Anil Dharadla. Following their prepared remarks, we will open the call to your questions. With that, let me turn the call over to Leonard.

Thank you, Lily. Good afternoon, everyone, and thank you for joining us today. I'm excited to share my thoughts on how Green Dynamics is making strides across its business and highlight the progress we have made since we spoke with you two months ago. On the call today, I will provide highlights of our first quarter results, share with you what we are witnessing across our business on the demand front, and talk about the trends that are shaping our second quarter in 2021. When we spoke with you all in March, we provided commentary around the demand environment, both for the first quarter and the full year 2021, as well as highlighted reasons for our upbeat outlook. Today on the call, I'm happy to reiterate all the positive catalysts that we shared then, and furthermore, our strong first quarter results and guidance for the second quarter clearly indicates a robust demand environment where customers are actively seeking our services for strategic digital transformation projects across different industry verticals. Now, coming to the first quarter, I'm very pleased to report the highest revenue quarter in the history of great dynamics. Even after factoring out our recent acquisition of DAX, This was an all-time high quarter. In the first quarter, our revenue of $39.1 million included $6.5 million of revenues from docs, and it was higher than our guidance range of $35 to $36.6 million. Both docs and non-docs revenues exceeded our expectation as demand picked up across all our vertical industries. As I indicated last year, Q1-21 is an important milestone achieved. And this quarter, our revenue exceeded pre-COVID level of Q1 2020. There are many positive trends in this quarter. And I wanted to share with you some of the notable ones. In each of three months of the first quarter, our revenue were higher than our expectations. So at the end of January, we witnessed a significant pickup in customer activities as digital transformation initiatives took center stage. While there are several reasons for this, we believe a positive economic outlook, improving customer sentiment, and catch up in spending at some customers who held back in 2020 have been key reasons. Additionally, for many customers, digital transformation initiatives have elevated to become mandatory. Based on our customer engagements and interactions, we believe these positive trends will persist, leading us to be incrementally positive for the remainder of 2021. There has been an uptick in demand for talent across multiple skill sets. While there is something we witnessed last quarter with a greater demand for data science specialists and big data engineers, this quarter the demand spreads across a wide spectrum of engineering skill sets. Examples of these include front-end and back-end engineers, DevOps, and quality engineers as well. We've increased our focus on hiring, expanding our internship offerings, and training great dynamics engineers. During the first quarter, we added a total of 162 people over the fourth quarter of 2020, and our headcount reached 2,056 employees. Our workforce continues to expand offshore as we build dedicated offshore centers at some of our customer locations. We entered the first quarter with 88% of our workforce in offshore locations, up from 86% in the last quarter and 81% in the quarter a year ago. As we highlighted last quarter, a combination of continued focus on cost efficiencies, greater acceptance of remote work, and ability to staff and scale delivery teams quickly have been key factors. We expect the trend to reverse as we slowly return to normalcy in the United States and customers see greater collaboration with onshore presses. During the quarter, we added six new logos in our core organic business, with all of them contributing revenue in this quarter. Two were in TMT space, one in healthcare, one in services, one in the specialty retail, and one in CPG. As you all know, in December 2020, we acquired DAX, and as we highlighted, DAX customers tend to work the startups and mid-market customer base. During the quarter, we had a total of 184 customers, out of which 48 customers were part of Organic Great Dynamics. Revenues from our top five customers in the quarter was 50%. This was down from 64% of our revenues in the same quarter a year ago. The diversification of our customer revenues was largely driven by a combination of our continued success in renting new logos going deeper with existing customers in our recent acquisition of Dux. Within our top five clients, two are in the TMT space, one is in banking, one is CPG, and one is retail. During the quarter, we'll launch an accelerator in partnership with AWS. This partnership enables our customers to launch modern data platform based on Amazon's cloud and roll out advanced data analytics capability in short time frames. Customers deploying our accelerator can reduce implementation times from months to days. During the quarter, we had three customer wins across CPG and manufacturing markets. Now we're coming to some segment commentary. At 37% of our first quarter revenues, TMT continues to be our largest vertical, similar to last quarter, our largest TMT customers continue to focus on expanding offshore delivery offices with breed and end. That said, we see at those customers a return to revenue growth over the fourth quarter. Going forward, we continue to believe TMT will continue to be our largest vertical, and the focus will be complemented by acquisition of DAX, where roughly two-thirds of this revenue derived from the TMT industry vertical. At 22% of our first quarter revenue, CPG and manufacturing continued to show robust growth, both on the sequential and year-over-year basis. Underpinning this strong growth was our success at one of the largest global CPG brands, which became one of the largest customers of Green Dynamics in the first quarter. As we highlighted in our call in March, we entered 2021 with key design wins at this customer and expect to maintain strong momentum in 2021. At 23% of the first quarter revenue, retail business continued to witness growth over the last quarter. Within this segment, we witnessed e-commerce-friendly brands continue driving the growth in the quarter, while the brick-and-mortar department store continued to be a mixed bag. During this quarter, we delivered on some of the notable projects. We're a California-based enterprise search company offering artificial intelligence-powered search engine solutions to many of the world's largest brands. We assisted the company in improving its search process. Our solutions were in the area of full-text search, and we used semantic query parsing to improve the overall performance. You also expect the customer to deploy this offering across various industries. For a technology company in the field of computer accessibility, we helped to create a product that detects accessibility issues in mobile applications. It extends the product offering of the client line, which was until recently covering web only. The minimum valuable product was delivered in the record time of two months, align our customer to announce its release before a round of funding. In the broader context, the product will help bring the attention of companies to accessibility limitation in the application and make digital technology available to everyone. For any EMA-based online marketplace, we implemented a modern search engine based on open source technology to help overcoming the challenge of retrieving products of interest during the browsing experience. The platform has been developed, tuned, and made ready for go-live in a fast-paced schedule of only nine weeks. Discovering the right product is the most critical part of channeling users' buying behavior. With three dynamic search technologies, the company will be able to effectively attract, convert, and retain more and more business to come. For one of the largest U.S.-based manufacturing company, Green Dynamics architecture and engineering team developed a groundbreaking new concept of new lifestyle platform that was released to the public in Q1 2021. Green Dynamics assessed the market needs and brought to the client our versatile knowledge of the best practices in CPMG. It's a very successful start to the recent partnership. With that, let me turn the call over to Anil, who will discuss Q1 results in more details. Anil?